UK ahead of EU as bloc likely to ‘slip into recession’
The UK grew ever so slightly faster than the EU in the second quarter as falling exports brought growth in the bloc to a near standstill.
Revisions to the EU’s GDP figures between April and June showed that the bloc grew at just 0.1 per cent, down from a previous estimate of 0.3 per cent.
Exports fell 0.7 per cent in the bloc, which was marginally offset by a small rise in government expenditure.
Figures released last month showed that the UK grew at 0.2 per cent over the same period thanks to a strong performance from the production sector.
Growth in the bloc was hamstrung by weak performances from Italy, which contracted 0.4 per cent, and Germany, which stagnated. Both nations have struggled with slowdowns in manufacturing. The data was also impacted by downwards revisions to Irish GDP.
“The downward revision to the euro-zone’s second-quarter GDP data means the economy is now thought to have essentially flat-lined since the fourth quarter of last year,” Andrew Kenningham, chief Europe economist at Capital Economics, said.
Recent releases have shown falling consumer and business confidence in the eurozone, while measures of private sector activity are also starting to turn negative.
Kenningham suggested that the eurozone will “slip into recession in the second half of the year”.
This will cause a headache for the European Central Bank, who are deliberating on their latest interest rate hike. Markets are predicting a 25 basis point hike when the central bank meets next week, but the data may force the ECB to rein in further hikes.